Premier Oil hits improved production targets and edges closer to agreeing refinancing

Oliver Gill
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Getting closer: Premier Oil has gone through a protracted refinancing process with lenders (Source: Getty)

Premier Oil shares nudged up around 0.5 per cent after revealing it had hit improved production targets and was "nearing completion" of its drawn-out debt refinancing.

Despite working through a painful financial restructuring with lenders, Premier Oil reached record production levels, hitting 71,400 barrels per day – in line with improved targets.

Revenue, however, fell from $1.1bn (£897m) to $980m.

Read more: Back to the black? Premier Oil gears up for debt refinancing update

12 January 2017 @ 9:00amPremier Oil (PMO)

Last year, Premier Oil bought up gas fields from German energy firm Eon and the taps are set to be turned on at its North Sea Catcher project in the second half of the year.

Before taking into account any contribution from Catcher, the firm projected another bumper year of production, expecting 75,000 barrels per day.

"The Catcher project continues to progress well and will provide another step change in production, generating enhanced, tax-free cash flows for the group," said chief executive Tony Durrant. He summarised 2016's results as "a strong operational performance".

Closing in on the refi

Premier Oil has been edging closer to completion of refinancing its near $3bn of net debt.

The firm revealed "all substantial commercial terms have been agreed" with the coordinating committee of its revolving credit facility – similar to a corporate overdraft – and with other private lenders.

Read more: Premier Oil shares rise as it enters final stages of refinancing talks

Final terms for the refinancing were at an "advanced stage", the group reported.

The news prompted Durrant to paint a rosy picture looking forward. He said:

Our debt refinancing is nearing completion which, together with the improving commodity price environment, will enable us both to accelerate debt reduction and to progress future growth projects.

In the meantime, lenders will be pleased that net debt levels of $2.8bn are in line with expectations and the firm has significant liquidity if required, with undrawn cash facilities of approximately $600m.

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